Case 2: Nuclear Safety Research Inc. Nuclear Safety Research Inc. (NSR) is a con

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Case 2: Nuclear Safety Research Inc.
Nuclear Safety Research Inc. (NSR) is a consulting firm which conducts safety examinations
of steam tubes in nuclear reactors. Its clients include nuclear power plants throughout
the world. In the United States, most of NSR’s clients use what are referred to as “boiling
water reactors” (BWR). With all reactors, the steam pipes are one of the more vulnerable
points. With boiling water reactors, however, the steam passing through the tubes is
radioactive, so the danger is much greater. In addition, the cost of repairs is extremely high,
because repairs must be done remotely using sophisticated and expensive robotics equipment.
Of approximately 330 reactors worldwide, approximately one-fourth are BWRs. In
the United States, BWRs represent about one-third of approximately 110 reactors in use.
The testing procedure to examine steam tubes for flaws and cracks involves using an
electronic probe to measure the thickness of the tubing. Under normal conditions, the
tubing is the same thickness throughout. Variations in thickness indicate wear, and signal
possible future problems. This method is called “nondestructive examination” (NDE),
because the tube is left intact. When nondestructive examination indicates a possible
defect, the section of tubing is cut out and inspected.
One of NSR’s engineers has suggested a way to redesign the electronic probes used in
NDEs. The engineering department estimates that redesign of the probes will cost approximately
$450,000. NSR’s president is intrigued by the idea, since improved accuracy of
testing would greatly reduce both cost and risk. He asks Jack Trelligar, NSR’s controller, to
do a quality-cost analysis of probe redesign.
Copyright © Ansari, Bell, Klammer. All rights reserved.
Measuring and Managing Quality Costs
Using normal procedures and existing equipment, NSR’s safety review of a reactor
takes 6 to 8 months. Of this time, almost 2 months is preliminary work. First, a schematic
diagram of the steam tubes is marked off with a grid, to define sections a few inches square.
Testing work is planned so that an examination will be made in each square of the grid. For
sections where the risk is higher, such as where the tube attaches to nozzles or flanges, a
finer grid is used, and test readings are closer together.
NSR routinely monitors equipment reliability in its testing lab by taking readings of
sample tubes, some of which are known to have defects. In addition, NSR routinely re-tests
some tubes examined in the field. Last year, the firm completed NDE engagements at 57
nuclear power plants worldwide, and examined a total of 969,000 steam tubes. Of these,
the firm re-analyzed 226,500 tests. Re-tests found erroneous test results in 679 cases.
Two types of errors may occur in testing. A false positive occurs when test results
identify the tube as defective, but there is in fact no flaw in the tube. A false negative
results when the tube passes inspection, but there is in fact a crack or hole (see Exhibit 15).
A false positive is expensive for the client firm, because cutting the tube section open
disrupts operations. A false negative, however, is far more dangerous.

At the client facility, there is no way to know when a false negative has occurred. This is
particularly dangerous, since the Nuclear Regulatory Commission routinely extends licenses
of facilities which receive clean test results for an additional 20 years beyond the normal 40-
year life of a reactor. This means tubes are operated well beyond the intended life, and the
danger of an accident is greatly increased. Recently, based on the results of NSR’s tests, a
client facility was shut down and all 17,000 steam tubes were repaired, at a cost of $40 million

Questions:

When a test of steam tubes at a client facility produces a false positive result, what
activities will NSR perform? What activities will the client perform? How would you
estimate the costs of these activities?

When a test of steam tubes at a client facility produces a false negative result, what
activities will NSR perform? What activities will the client perform? How would you
estimate the costs of these activities?

Do you think the probe should be redesigned? With so little cost data available, how
can the firm analyze this decision?

.

Explanation / Answer

Nsr perform safety examination of steam tubes. When result is false positive means tube is not defective. Client uses BWR to perform safety activities in nuclear power plant.

When result is false negative then tube is defective and we do not get this result because it is very dangerous.

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